Supply gaps: CIL ups penalty

Coal India Ltd (CIL) has agreed to pay a higher penalty for failure to supply the requisite quantum of coal to the power producers. The new penalty rates, which were decided in CIL’s board meeting held on Tuesday, range from 1.5% to 40% instead of the earlier 0.01%.

Coal India Ltd (CIL) has agreed to pay a higher penalty for failure to supply the requisite quantum of coal to the power producers. The new penalty rates, which were decided in CIL’s board meeting held on Tuesday, range from 1.5% to 40% instead of the earlier 0.01%.

The penalty is the price percentage of total coal price being paid by the power producers to CIL.

The new penalty rates are based on a grading level wherein coal supplied below 50% of the contracted quantum will attract the heaviest penalty of 40% while if the supply is between 65% and 80%, then the penalty is 1.5%.

“The board also agreed ‘in-principle’ to price-pooling of imported coal,” said S Narsing Rao, chairman of Coal India Ltd, after the board meeting.

Rao added that only if all power producers agree to pay higher price for imported coal then price-pooling of imported coal could be done.

“‘It (price pooling) cannot be done on a case-to-case basis rather for the entire sector,” Rao added.

CIL has agreed to assure at least 80% coal required for a power plant whereby the company will supply 65% coal from domestic mines and the remaining 15% coal would be imported.